Steve Varsano runs The Jet Business, a London showroom where buyers can tour a full-scale jet mock-up. A new jet costs $85 million; a three-year-old Gulfstream G550 runs $45 million with $45,000 per flight operating costs. The pre-owned market is still depressed, with prices below 2007 levels.
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Another aviation market set to pick up pace: private jets. If you've never flown in your very own plane and you're wondering what it's like, well, there's now a new shop that recreates the look and feel in its bid to sell to the global elite. Olivia Stearns went down to The Jet Business to see what they've got in store.
Walk on board a private jet and the appeal of owning one is instantly obvious. But to prove the point, Steve Varsano has built a mock-up.
Okay, so as you can see through the windows here that the— it's simulated that we're flying. We could change it to day or night or thunderstorms or sunny.
And how much would this cost?
This is about $85 million new.
He set up a showroom right in the heart of London, hoping to sell used planes to buyers from all around the world.
We see activity coming from China, from India, from actually from Mexico, Nigeria. We see a lot of these places which are used to be frontier markets and they went to emerging markets and now they're real significant markets. I'd say about 60% of our business is the ultra-high net worth type people, 30% are the corporate executives buying for the corporations, and about 10% are governments.
To browse the inventory, Varsano has set up an interactive display complete with all the interior and technical specs.
At the Jet Business Showroom, customers can come in and work out exactly what type of plane is best for them. Depending on the size, speed, and cost. So, for example, I've been able to find a 3-year-old G550 that I could buy for about $45 million that would get me and 16 of my closest business associates to New York for about $45,000. And here on the simulation wall, the plane is actually traced out in real-life scale, so I can tell exactly how well I would fit.
So how much demand can Varsano actually expect? Well, J.P. Morgan says the business jet market is largely a function of corporate profits. By that metric, they expect new deliveries to bounce back some 8% this year after flatlining in 2011. In the pre-owned market though, jet prices are still stuck in a trough. So analysts say it's too soon to conclude that things have simply bounced back.
I think everyone's desperately looking for signs that it has, but they're not really there yet. On average, 12% of all jets change hands every year, and that's happening, but the prices are way lower than they were in 2007. The big aircraft have held up much stronger. The large Gulfstreams, the large Bombardier aircraft have held up. There's a lot of demand.
Demand fueled not just by the small crop of the world's wealthiest who can afford those big planes, but also by the fact that new buyers in emerging countries have further to fly.
